KARACHI, June 20: Sindh’s finance minister Abdul Hafeez Sheikh on Thursday expressed the hope that the provincial tax revenue would improve by more than 15 per cent in the coming fiscal year over the revised projection of the recoveries made in the current fiscal year.
The Sindh budget documents for the year 02-03 indicate a total expected collection of Rs8.55 billion taxes during 02-03 as against projected recovery of Rs7.39 billion in the outgoing current fiscal. The original budget of the current fiscal year had indicated tax revenue of Sindh at Rs7.98 billion which was brought down by more than Rs500 million mainly because of the persisting drought, adverse effects of September 11 and the mounting tensions at the borders.
A major cut has come in the tax recoveries on income of the agriculturist. It was originally expected to mop up Rs700 million. In the next year’s budget documents this figure had been revised downward to Rs550 million. Financial analysts doubt even if this amount is collected, because the estimated recovery from kharif crops is hardly Rs250 million. Kharif crops — cotton, sugarcane and rice — are the major cash crops which offer good money to the farmers and hence the chance of good tax collection.
The government hopes to collect Rs700 million from the agriculturists which again would depend on the kharif crops.
In his budget speech, the Sindh Finance Minister said that property tax is emerging as one of the major source of tax revenue following a detailed property survey carried out last year after an interval of over 30 years. More than one lakh property units had been identified and a uniform tax system was introduced, which has increased collection by 20 per cent. Property tax is passed on to the district government from where it is collected and the provincial government retains only collection charges.
The budget document shows that Sindh government would be able to retain Rs200 million from property tax collection next year. In the current fiscal year Sindh government is expected to retain Rs183 million as against originally anticipated Rs165 million.
Stamp duties remain the principal source of provincial earnings with an expected yield of Rs2.30 billion next year as against indicated recovery of Rs1.90 billion in the current fiscal year.
Motor Vehicle Tax will generate Rs1.17 billion as against Rs1.07 billion this year. Originally it was expected that MVT will give a yield of Rs995 million. Provincial excise is expected to generate 40 per cent more revenue next year when total recovery is expected around Rs900 million as against Rs610 million this year.
Infrastructure fee and a few other levies will generate Rs1.90 billion. This amount can increase further if the volume of imports pick up in the year 02-03. Infrastructure fee is levied on the transportation of imported items.
From other small levies including tax on hotels, cotton fee and electricity duty, the government expects to raise about Rs 600 million next year.
Irrigation charges, the single largest source of non-tax revenue is expected to yield about Rs600 million. The collection amount is somewhat suppressed because of the less availability of waters owing to drought. The recovery can improve if the flow in river waters augment and farmers use more water.